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GoldQuest Mining, Simba Energy, and Stornoway Diamond were three of the most heavily-traded mining stocks last week. Here’s a look at what factors moved them.
Here’s a look at three mining stocks with some of last week’s highest trading volumes (or the most shares exchanged between buyers and sellers).
GoldQuest Mining Corp. (TSXV:GQC) saw much higher volume than any other stock on the TSX Venture Exchange on Thursday, with 16,286,412 shares changing hands. The intense activity continued into Friday, when GoldQuest saw a volume of 8,671,930 shares, and once again topped the exchange.
The heavy buying caused a huge spike in the company’s stock price, from just $0.075 at Wednesday’s close to $0.395 at the end of the day on Friday.
Investors were snapping up GoldQuest stock because the company announced impressive results from its 100 percent owned Las Tres Palmas project in the Dominican Republic on Thursday morning. GoldQuest is currently conducting a 15-hole drilling program at the site.
The project has returned evidence of gold and copper mineralization up to this point, but the results from the northernmost hole, LTP 90, were by far the most significant to date. The company said the hole intersects the Romero gold and copper sulphide mineralization.
Hole LTP 90 hit gold mineralization at a depth of 33 meters, extending down to 264 meters, where the company said the hole was “terminated within mineralization for technical reasons.” That added up to a total of 231 meters grading 2.4 grams per tonne of gold.
Copper mineralization was just 0.04 percent from 33 meters down to 103 meters, but jumped to 0.62 percent from 104 meters to 264 meters. The hole is located just 200 meters from an access road and 500 meters from GoldQuest’s field headquarters in the village of Hondo Valle.
“It’s an amazing hole,” said GoldQuest CEO Julio Espaillat. However, he added that at this point the company has “more questions than answers.”
In an effort to get a better grip on the true extent of the deposit, GoldQuest will now start a new drilling program centered around hole LTP 90.
Simba Energy Inc. (TSXV:SMB) was second to GoldQuest in volume on Friday, with 5,359,514 shares traded. Its stock price jumped 21.9 percent on the day to $0.195.
Simba is an oil and gas exploration company that operates in the African countries of Kenya, Guinea, Liberia, and Mali. Simba focuses on “onshore frontier areas” of Africa.
The stock jumped on news that Guinea’s government has approved the company’s 60 percent production sharing agreement on two exploration blocks totalling 12,000 acres in the country’s Bove basin.
According to the Simba, the two blocks “possess significant hydrocarbon exploration potential that supports taking an aggressive near-term exploration approach.”
Simba bases its conclusion on a number of factors, including the presence of “seeps,” or large amounts of heavy oil at the surface, as well as evidence of light oil staining in historical core samples.
To fund its activities, Simba recently announced that it closed a private placement (or an equity issue to one or a few buyers without a public offering) on April 16, 2012.
The company raised $4,242,900 by issuing 53,036,250 units for $0.08 each. Each unit consisted of one Simba share and a warrant that can be converted to a Simba share at an exercise price of $0.16 a share for 24 months after the closing date.
Barney Gray, a broker at UK-based Old Park Lane Capital, was optimistic about the company’s prospects. “Coupling the recent fund raising with the granting and approval of licences across Africa, Simba has positioned itself well to advance with work programmes and farm-out discussions,” he said in a note.
Stornoway Diamond Corp. (TSX:SWY) was one of many heavily-traded resource stocks on the TSX on Friday, with a trading volume of 6,039,738 shares. The stock slipped 1.22 percent on the day to $0.81.
Stornoway’s main focus is developing its 100 percent owned Renard diamond project, which looks set to become Quebec’s first diamond mine. The company envisions a mine at the site with an eleven-year life.
In November 2011, Stornoway released a positive feasibility study based on probable reserves of 18 million carats representing 23 million tonnes at an average grade of 78 carats per hundred tonnes. The company is now in the process of obtaining the final required permits from the provincial government.
Last Wednesday, Stornoway announced that it is spending $28.4 million to get the site ready for development. The company will use some of the $40 million that it has raised since March to help pay for this work.
This new spending will pay for engineering and design services, as well as items that must be ordered well before they’re needed to ensure that they arrive on time. The company will also add to its Quebec-based mining team, which will take responsibility for designing the mine and other facilities, as well as security at the site.
In addition, on February 3, 2012 the company announced that construction had begun on an extension to Route 167, which will make the project road accessible year-round. The extension is being funded by the Quebec government. Stornoway expects vehicle access to the site by mid-2013.
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.